2023 has been a relatively good year for the benchmark S&P 500 and growth stock-fueled Nasdaq Composite. The S&P 500 is widely viewed as the best benchmark of Wall Street’s health. It’s a market cap-weighted index comprised of 500 generally profitable, time-tested companies, a few of which have multiple classes of shares. All told, the S&P 500 has 503 components, with representation from all sectors and most industries.
The S&P 500 is higher by nearly 13% on a year-to-date basis, as of this past weekend (ended Oct. 13), the equal-weighted S&P 500 is down by almost 1% for the year. In other words, the Magnificent Seven have been almost entirely responsible for pulling the benchmark S&P 500 higher this year.
The S&P500 without the top [magnificent] seven companies is down 14% year to date.
Apple (AAPL 0.25%)
Microsoft (MSFT 0.96%)
Alphabet (GOOGL 0.45%) (GOOG 0.39%)
Amazon (AMZN 1.62%)
Nvidia (NVDA 1.36%)
Meta Platforms (META 0.03%)
Tesla (TSLA -9.49%)
The Magnificent Seven bring two attributes to the table that make them irresistible to many investors.
1. they’re industry leaders with relatively sustained moats and/or competitive edges.
2. They outperform.
The Magnificent 7 now account for 29.6% of the total S&P 500 market cap, the highest level on record pic.twitter.com/TyIlSgjtkI
— Barchart (@Barchart) October 14, 2023
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
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Hadn’t thought of it like that. I have taken substantial positions in all of them other than Facebook and Apple and it has done good things for my portfolio.
I also expect most of my funds hold some or all of them, as I do lean heavily towards tech (and especially AI) and medical, and have for twenty years.
I still get sad at a memory from when I discovered Amazon and ordered some books in 1998. I almost never see a product or company and think to myself: Gee, I should buy stock. That’s not my method. But that time I did, I can even remember exactly the red light I was stopped at when I did. 20k would have been like 4 million dollars today, but I was in the middle of a divorce, yada yada, and so let myself be delayed from doing that for over a decade after which I put substantially more than that in, and for a very good return, but even so, sigh.
Buffett and Munger say that their biggest errors have been errors of omission where they saw a good opportunity but just sat sucking their thumbs.